1 Extraordinary Stock That Could Turn $200,000 Into $1 Million by 2034

1 Extraordinary Stock That Could Turn 0,000 Into  Million by 2034

THE Nasdaq-100 The technology index plunged 33% in 2022, only to soar almost 54% in 2023. This year, it has already achieved a gain of more than 10%. These fluctuations prove that it is almost impossible to predict the direction of the market in the short term.

However, if we zoom out to look at the last 10 years, the Nasdaq-100 has gained 421%, which represents an average of 18% compounded annually. In fact, history shows that the longer investors stay in the market, the greater their chances of earning a positive return. It’s easy to track the performance of major indexes like the Nasdaq-100 using exchange-traded funds (ETFs).

But investors with a greater appetite for risk can outperform the market as a whole if they pick the right individual stocks. Uber Technologies (NYSE:UBER) could be an interesting candidate due to its strong growth and extraordinary future potential thanks to autonomous vehicles.

Uber stock might even be able to turn a $200,000 investment into $1 million over the next decade. But don’t let these high numbers discourage you; investors from all backgrounds can seize the opportunity to potentially earn a five-fold return.

1 Extraordinary Stock That Could Turn 0,000 Into  Million by 2034

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Uber’s biggest cost: drivers

Uber operates the world’s largest ride-hailing platform, in addition to a dominant food delivery service called Uber Eats and a growing commercial freight network. During the first quarter of 2024 (ended March 31), more than 7 million drivers took nearly 2.6 billion rides at the request of Uber’s 149 million monthly users.

Uber collected $37.7 billion in bookings for these trips during the quarter, of which $16.6 billion was paid to its drivers, the company’s largest single expense. After eliminating other direct costs, including money paid to restaurants for their Uber Eats orders, Uber was left with $10.1 billion.

When you drill down further into the income statement and factor in operating costs like research, development, and marketing, Uber actually lost $654 million in net income. It must be recognized that the company was profitable in 2023, and this trend would have continued without a drop of $721 million in the value of its investments.

Still, if Uber could eliminate the $16.6 billion cost of its drivers, it makes sense that its revenue and profitability would explode (assuming the price per ride stays the same).

Autonomous vehicles could be a multi-billion dollar industry

According to Cathie BoisAccording to Ark Investment Management, the proliferation of autonomous vehicles will create an autonomous transportation industry capable of generating $4 trillion in revenue by 2028. This timeline could be ambitious considering that only a handful of U.S. states have approved self-driving cars in a very limited capacity with strict rules.

Uber CEO Dara Khosrowshahi says it’s very difficult to predict when autonomous vehicle penetration will start to increase, but he’s certainly not waiting. For starters, Uber owns a 21% stake in Aurora, which acquired Uber’s self-driving development division in 2020 and continues to build on the technology.

Uber also has a multi-year partnership with Motional, a joint venture between a driverless mobility company Aptive And Hyundai. Motional has developed a fully autonomous car using Hyundai’s Ioniq 5 electric vehicle as a basis, which users will eventually be able to hail via the Uber platform.

Uber has a similar partnership with Waymo, the autonomous driving division of Google’s parent company. Alphabet. Users can already hail a self-driving Waymo in Phoenix, Arizona, and the partnership recently expanded to food delivery. Internationally, Uber Eats and Mitsubishi Electric have teamed up to create a self-driving food delivery service in Japan.

Uber’s actions send a clear message to investors: autonomous vehicles are very likely to become the future of its business.

Uber’s stock could quintuple within ten years

Khosrowshahi says Uber aims to be a partner to the autonomous vehicle industry, meaning it will provide its platform and huge network of users, and companies like Motional and Waymo will provide the cars. You’re here is also becoming a leader in autonomous driving and plans to unveil a fully autonomous robo-taxi called Cybercab in August.

Tesla CEO Elon Musk wants to build a ride-sharing network within Tesla, but he will likely find it more economical if he and his customers instead lend vehicles to an established platform like Uber. Alternatively, assuming a change in strategy, Uber could also purchase a fleet of Cybercabs and keep 100% of the revenue generated from its ridesharing and delivery operations. This is a potentially win-win situation for both companies.

It’s too early to know exactly how this will evolve, and we don’t know how much it will cost Uber to offer self-driving cars versus human drivers. However, even if Ark Invest’s forecast of $4 trillion in autonomous ride-hailing revenue were generated over the next decade rather than by 2028, Uber could still theoretically capture $1 trillion because it has a share market share of 25% in existing carpooling. industry. This would translate to $100 billion in revenue per year (on average).

Assuming Uber’s price-to-sales (P/S) ratio remains constant, it will need to increase its revenue by 17.5% each year for the next decade to guarantee a five-fold increase in its stock. Wall Street forecasts suggest Uber will generate $43.1 billion in revenue this year, which would represent a 23.9% increase from 2023. This also means the company will have grown revenue at a rate compounded by 24.9% over the past five years.

In both cases, Uber is growing comfortably above the threshold without no notable contribution from autonomous vehicles to date. Simply put, a five-fold return over the next 10 years is entirely possible for Uber stock, and that outcome could even be even more positive thanks to autonomous technologies.

Should you invest $1,000 in Uber technologies right now?

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony DiPizio has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Alphabet, Aptiv, Tesla and Uber Technologies. The Motley Fool has a disclosure policy.

1 extraordinary action that could turn $200,000 into $1 million by 2034 was originally published by The Motley Fool

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